Lane explains proposal for Leading Edge Group bid

By James Wells

SYDNEY: Leading Edge Group CEO Keith Lane yesterday sent a proposal to BSL members to win support ahead of a consortium of 95 retailers and 130 shopfronts from within the group led by $50 million retailer – Everard Johnson.

The typed document, acquired by Current.com.au, features no introduction and commences with a bold sub-heading titled: “The Past” and underneath says: “A litany of tragic misjudgment, waste and mismanagement."

Underneath a second sub heading titled: “The Future”, Lane said: “A robust, viable and united channel returned to its previous full glory with all stakeholders making a better return. The opportunity to grow the group through further recruitment and roll out of super stores.

“How? By combining the resources both financial and knowledge based skills and experience of both the consortium and Leading Edge. By learning from past mistakes and by collaboration.

“You have experience in your field of expertise; we have a proven track record of sound business and financial management. You have the combined purchasing power, we have a manager who can drive your business forward. You have an IT system, we know how to improve it, including reinstating a store based proposition, and we know how to lower its cost. The combined strengths are powerful. You have supplier relationships, but they are tainted by your current problems. We have a good reputation and significant credibility. The synergies obtainable through a true partnership are enormous.

“We will centrally bill for those members and suppliers who need this capability e.g. Fisher & Paykel. Leading Edge has the working capital to fund the business into profit.

“We will reduce overhead and return maximum rebates to members, in the order of 3% -5% based on current rebate structure to fund the group’s overhead and make a fair return to Leading Edge we will need to keep 1.5% – 2.5% of supplier rebates, exact dollars will depend on volume of purchases achieved. The full details can only be known after we have a sense of numbers and volume and following discussions with an elected committee to determine the most appropriate business model and member agreement.

“If members wish to become shareholders they may, although this is not compulsory.

“Members will have more influence over the direction of the group than they have in the past.

“We have made this offer to the consortium and they will not talk to us. The problem they have is that they have some of the skills and resources and we have the rest. We need each other to really make this work. Together we can keep the whole intact and working in the best interest of all.

“If sanity and common sense prevail, we can resolve the problems in the best interest of the whole membership and suppliers, and we can all make a dollar and prosper.

“We propose a partnership, whereby the consortium and Leading Edge form a Joint Venture company to purchase the assets needed from the receiver and liquidator, members may invest or not. Any investment will equate to shareholding equivalent to money invested related to cost of acquisition. Leading Edge does need to own 51%."

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